Dear Victor,

The GTAP data base has tax and other data for a large group of developed and underdeveloped countries. The sponsor provides a RunGTAP program with the data set that allows you to make block of countries such as the TRIAD countries, Latin America etc.

Once a model is set up, you can cut/increase taxes by any percentage for a country, blocks, regions etc and calculate the impact. Other institutions such as the WTO and the ITC have their own data base for similar calculations, but they do not make their model available. So, I recommend that you check out the GTAP website at www.gtap.agecon.purdue.edu/databases/

Of course, GTAP is an unavoidable starting point in such a subject. You must nevertheless be aware it is only a starting point. You shall have to develop your own model and data set, according to your own objectives.

In addition to fund government expenses, tax reforms may have many objectives, leading to different models. For instance, if you want to test inequality-reducing policies, you shall have to consider different kinds of consumers, some of them being “rich”, other “ poor”, and develop different consumption functions for each of them….In any case, even if inequality is not your preoccupation, you shall have to describe how will government spend additional revenue (or cut expenses...). Finally, a tax reform, by changing the determinism of investment, will have long lasting dynamic effects. Investigating them would lead to some sort of dynamic recursive model , with the stock of capital updated each year… I am not sure the GTAP data sets provide much information in these respects…It must be updated according to the particular model you have in mind. I wish you good luck ! (but it is a challenging endeavour!). (although the subject is slightly different, you could have a glance at: Boussard, Gerard and Piketty : Should agriculture be liberalized ? Science publishers, Enfield (NH) 2008; We made use of “transformed” GTAP data sets, in order to introduce non standard considerations)

Thanks Joao, Lall and Jean-Marc,

I took note of all your recommendations. I found the topic very challenging. I want to make a comprehensive reading and discussion before the formulation, calibration and running of the model. Coming from a developing country issues like inequality or effienciency are key points. The stocks and flows of the capital depend on institutions, market structures and policies involved. Developing countries obtain most of its fiscal revenues from indirect taxes.